Finance Market Professionals
Session 3.4: Identifying Optimal Levels of Regulation and Efficient Oversight in the Securities Market: Theory and Practice
Issues that are the most relevant to professional market players are going to be discussed in this session, covering management of regulatory burde...
Issues that are the most relevant to professional market players are going to be discussed in this session, covering management of regulatory burdens and efficient interaction between the regulator and market participants during oversight activities.
In 2018, the Bank of Russia issued the ‘Concept of proportional regulation and risk-oriented oversight for non-credit financial organizations’ (NFOs), and worked with self-regulatory organizations and market participants in order to draw a roadmap to introduce the concept for securities market players. As part of the implementation of this Concept, the principles and approach to oversight by the Bank of Russia are changing.
The basis for proportional oversight is the risk level in supervised organizations, as well as the nature and extent of consequences for such organizations in case they fail to meet the requirements for consumers, the industry and the market as a whole. Accordingly, when performing regulatory interaction with other market participants, the Bank of Russia currently places the emphasis on introducing a risk-based approach and ensuring a transition to proportional supervision by establishing uniform ways to determine the oversight methods, depending on the size and significance and the risk profile of supervised organizations. At the same time, there is a significant burden that the supervisory procedures lay on financial institutions, market participants say.
During the discussion between the professional community and the regulator, further steps to implement the optimal regulation and the risk-based supervision of NFOs will be considered.